NEW DELHI: The Institute of Chartered Accountants of India (ICAI) may review the financial statements of IndusInd Bank, which has reported discrepancies in its derivatives portfolio amounting to Rs2,100 crore.
The issue, which could impact 2.35 per cent of the IndusInd Bank net worth as of December 2024, was disclosed by the lender on March 10.
The Financial Reporting Review Board (FRRB) of ICAI is responsible for ensuring compliance with accounting and auditing standards. ICAI President Charanjot Singh Nanda stated on Thursday that the board may proactively undertake a review of IndusInd Bank’s financial statements.
FRRB examines financial statements for adherence to Accounting Standards, Standards on Auditing, and the Companies Act, 2013, alongside RBI’s master circulars and guidelines.
The bank noted that the accounting lapse was first identified around September-October last year and provided a preliminary update to the Reserve Bank of India (RBI) last week. An external agency has been appointed to investigate the matter, with a final report expected by early April.
Background and industry context
IndusInd Bank, one of India’s leading private sector lenders, has previously faced scrutiny over governance and risk management practices. In 2021, the bank was questioned over irregularities in its microfinance loan disbursals, though it later addressed the concerns.
The current issue, centered on its derivatives portfolio, raises fresh concerns about financial oversight and risk management in India’s banking sector.
Accounting lapses of this scale have in the past led to regulatory intervention and increased scrutiny of financial disclosures by both the RBI and ICAI. The outcome of the external review and any potential FRRB action could set a precedent for how such discrepancies are handled within the banking sector.
